China Eximbank provides $38.9 million buyer’s credit loan for Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project (Linked to Project ID#45047)

In November 2006, China Eximbank and the Government of Ethiopia’s Ministry of Finance and Economic Development signed a $500 million buyer’s credit facility agreement (互惠贷款) — also known as a master loan framework agreement and a master facility agreement — for an unspecified set of development projects. All subsidiary loans approved under the buyer’s credit facility agreement (captured via Project ID#45047) carried the following borrowing terms: a 13-year maturity and an interest rate of LIBOR plus a 2-3% margin. All of the subsidiary loans were secured with (i.e., collateralized against) Ethiopia's export receipts to China, which at the time primarily consisted of sesame seed export receipts. The buyer’s credit facility agreement also required that all Ethiopian exports (export receipts) to China to be overseen by the Commercial Bank of Ethiopia, the country’s largest state-owned financial institution. 16 subsidiary loans for 16 different projects were reportedly approved under the buyer’s credit facility agreement. According to the Government of Ethiopia’s Aid Management Platform (AMP), China Eximbank and the Government of Ethiopia signed a subsidiary buyer’s credit loan worth approximately ETB 354,476,531 ($38,992,418.41) for the Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project on June 13, 2008. The borrower was expected to use the proceeds of the loan to finance approximately 85% of the cost of an ETB 410,544,213.50 ($32.98 million) commercial contract between the Ethiopian Electric Power Corporation (EEPCo) — an Ethiopian state-owned enterprise — and China CAMC Engineering Co. Ltd. (CAMCE), which was signed in August 2007. According to the Government of Ethiopia’s AMP, the ETB 354,476,531 ($38,992,418.41) loan achieved a 62% disbursement rate, with China Eximbank making 6 loan disbursements (worth ETB 218,318,792) between 2010 and 2012: an ETB 11,081,561 disbursement on March 31, 2010, an ETB 17,955,612 disbursement on July 7, 2011, an ETB 2,680,069 disbursement on October 10, 2011, an ETB 89,359,689 disbursement on January 8, 2012, an ETB 63,176,117 disbursement on October 10, 2011, and an ETB 34,065,744 disbursement on January 8, 2012. The purpose of the project was to construct a 400 kV, 193.77 km power transmission line that connects Bahir Dar II substation to Debre Markos substation. Its precise implementation start date is unknown. However, as of September 2010, the project had achieved a 75% completion rate. The project was officially completed and inaugurated on March 19, 2011. It was originally scheduled to commence on June 13, 2008 and reach completion on December 13, 2009.

Additional details

1. The Chinese project title is 埃塞俄比亚400kV变电站和输电线路项目. 2. AidData has estimated the all-in interest rate by adding 2.5% (the midpoint between a 2% and 3% margin) to the average 6-month LIBOR rate in June 2008 (3.104%). 3. This buyer's credit loan from China Eximbank is not included in the database of Chinese loan commitments that SAIS-CARI released in 2020 and re-released in 2021. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 4. This project was part of a larger, $168 million project with four sections (‘Lots’) — known as the Bahir Dar-Debre Markos-Addis Ababa (BBDA) Power Transmission Line and Substations Project, the BBDA Power Transmission Line and Substation Project, the BBDA Power Transmission and Transformation Project, or the Tana Beles to Addis Ababa 400 kV Power Transmission Line Construction Project — that involved the construction of a 400 km transmission line from the Tana Beles hydropower plant to Sululta substation through Bahir Dar and Debre Markos substations. The power transmission line has three sections: a 67 km section from Tana Beles hydropower plant switchyard to Bahir Dar II substation, a 193.77 km section from Bahir Dar II substation to Debre Markos substation, and a 215.43 km section from Debre Markos substation to Sululta substation. 5. The AMP system identification number for the Lot 2 Bahir Dar-Debre Markos-Addis Ababa 400kV Power Transmission Project is 8714327100835. 6. 1 Ethiopian Birr (ETB) was equal to 0.11 United States Dollars (USD) in June 2008, which implies that the ETB 354,476,531 loan commitment recorded in the AMP was worth USD 38,992,418.41 at that time that it was contracted. 7. There is some evidence in the AMP that suggests this project may have been partially grant-financed. This issue warrants further investigation.

Number of official sources

3

Number of total sources

6